Emerge Energy obtains $40 million term loan facility, amends revolver

By Tali Rackner

Minneapolis, April 17 – Emerge Energy Services LP entered into a $40 million five-year second-lien secured term loan facility on April 12 U.S. Bank NA as disbursing agent and collateral agent, according to an 8-K filing with the Securities and Exchange Commission.

The agreement matures on April 12, 2022.

Loans will bear interest at Libor plus 1,000 basis points.

The credit agreement contains certain financial covenants that require Emerge Energy to maintain a minimum interest coverage ratio of 1.70 times beginning with the fiscal quarter ending March 31, 2018, increasing quarterly to 2.55 times for the fiscal quarter ending March 31, 2019 and thereafter.

Proceeds will be used to: (a) Pay down a portion of the partnership’s existing revolving credit facility; (b) fund an acquisition; (c) pay fees and expenses incurred in connection with the new term credit facility; and (d) for general business purposes. Substantially all of the partnership’s assets are pledged as collateral on a second-lien basis under the second-lien term loan agreement.

Also on April 12, the company entered into the twelfth amendment to its amended and restated revolving credit and security agreement, dated June 27, 2014 with PNC Bank, NA, as administrative agent and collateral agent.

The amendment revises the revolving credit agreement to allow the partnership and the borrowers to enter into the second-lien term loan agreement and to reduce the revolver to $190 million, and further reduce it on a quarterly basis to $125 million for the quarter beginning Jan. 1, 2019.

Southlake, Texas-based Emerge Energy Services is a limited partnership formed in 2012 by management and affiliates of Insight Equity Management Co. LLC to own, operate, acquire and develop a portfolio of energy service assets.

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